Stats for finance


No cake for spunky
I am increasingly involved in doing analysis for budgets and productivity in an employment field (we find people jobs, but funding is drying up). I know regression, some time series, and SEM, but I am looking for new financial or statistical tools because what I have clearly won't cover what we need to do. I have worked, years ago, with operations research (mainly linear programming) and six sigma.

One thing I need to work with is predicting when people will leave our system and spending by member by month over time. Will Cox Proportional Hazard address this....
Survival analysis seems natural to try for me. Kaplan Meier diagram could be good for illustration for you omnipotent bosses.

(In you other thread it could be good if you explained what you mean by 'ESM' and what model you use.)


No cake for spunky
I am not sure what you mean by my other thread (I have a lot). ESM is exponential smoothing models. I run different ones depending on the data.

Thank you for your response. Is cox proportional hazard regression similar to survival analysis or not? I have heard different things on this.


TS Contributor
An under-utilized tool for finance is Monte Carlo simulation. Use it for more informative sensitivity analyses. Evaluate uncertainty in projected sales, project costs and timing.

Another potential tool is Decision Trees.

Sam Savage has an excellent book called The Flaw of Averages that covers both. See his website for an overview.